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tv   Street Smart  Bloomberg  December 9, 2013 3:00pm-5:01pm EST

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potentially, or more redemption. we will keep watching the situation is more investors look to sears to realize the value of more of their real estate. more in 30 minutes, "street smart" is next. ♪ wil in the volatility, we are taking a higher, a move to a record high. 59 minutes to go until the closing bell. your last trade of today and your first trade for tomorrow. another day and another record. >> isn't it amazing? one after another. take marcus down for three or four days and guys come in and buy. that happened last week. here we are. i will show you three charts, we
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are sort of going back and forth. you see the s&p 500 up and down and up and down. i am dizzy. we are up 2/10 of one percent. have got a we deadline looming in washington friday. see if they can get a deal. that is why markets are sideways. a similar sort of action on the ten-year. down, up, and down and back up. up and down seems to be a theme, which, also, that is playing out in oil. back and forth and back and forth. we are looking for a deal friday. >> julie hyman. >> we have to talk about the big deal today in the food service industry. cisco, a food distribution company, buying u.s. vote, main competitor, privately owned, for about $3.5 million in cash and
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stock, creating a food distribution giant in the united states. investors like the deal. on the mcdonald's downside after comparable sales fell by 8/10 of one percent. struggling to some extent. it's menu has really expanded. some franchisees have pushed back against the complexity. it is losing customers to some of its rivals, offering eating value. one of its shareholders had pushed for it not to remove a contract with its ceo mike jeffries. is -- remove -- renewed the contract anyway. >> backoff nsa is the message from eight companies including apple, facebook, and google. they sent an open level to white house calling for limits on surveillance there is this comes from documents leaked by edward
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snowden showed they could get access using information by tapping into optic cables. the firms are rivals but they spoke in one voice saying -- panel if the rhetoric will result in greater privacy. director of activism at the electronic frontier foundation. alan butler, and our bloomberg west editor at large john -- cory erlichman. cori, it is interesting we have tech companies coming together, issuing a statement, saying, enough is enough. >> for all their concern about the privacy of individuals, do not think at its core values, facebook thanks -- things they share information.
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this is a business decision. for the companies trying to do business in a global environment, the nsa's practices, not just the ones , the prisonout program, which google and apple succumb to, the ones they do not know about they think are hurting their ability to grow. >> it is ultimately about what your customer wants. customers do not like the idea of the nsa being able to access all the information. >> that is a major concern for a lot of these companies. we are increasingly seeing, especially people international, they are worried they cannot trust american companies to hold their information safely away from governments, especially the u.s. government. one could see a situation where,
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down the road, international competitors could look good. i can hurt the markets a company and facebook, who are trying to go up -- grow internationally. is not just economic. >> let's stick with economic for the moment. it is interesting. do they have a leg to stand on? will they stand up to the nsa and say, we do not want you to do this, and basically has been -- and basically prevent them from tapping into the servers? have is to help them support from these companies. it is important to note there are measures these companies, some have taken, and others have not, to ensure communications and minimize the data they collect on users. aspect on important this. >> as i read the letter, "the balance of many companies --
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countries have tipped too far to the state. " what kind of change do you think they want to see from the government? >> what i found most hard in is that companies are grown -- calling to an end to mass surveillance. they are saying government areld have a target they collecting information on. that is a battle we are having in the. we have two driver -- arrival bills. one that would attempt to legalize and it's able surveillance and another presented that seeks to put strict limits on it and makes it so information cannot be collected in bulk. all of our data and digital information flowing to the nsa. these companies are putting a line in the sand and saying, they are on the side of her privacy and we want to see an end to the bulk collection of every -- everybody's digital
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information. >> you have got the senator from california, where most of these companies are talking about their pace. the senator from california's says we should legalize what they're doing. the senator not from california fighting the fight of these companies. it is an amazing moment right here where we have american companies using the best technology to keep the government at bay because they do not trust their own government. microsoft is trying to close that doors because they do not trust the government to do it for them. >> the tech companies trying to keep that information private. who do you think lindsay? -- when -- wins? >> we know they have not been because we know these backdoors have not worked in these cases. it does not look like the government is willing to back down. we know they have spent tens of
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the veins of dollars, a couple billion, just holding a big data center in utah, where we are building one that has its own water supply and the ability to store these information to all , that thatnies expenditure will continue, even if they are behind in this race. they might not have the best and the brightest. >> allen, who wins this? >> i think there is broad consensus ,n a number of -- reforms including additional oversight and transparency efforts. i do not think it is an all or nothing in area. there is a lot of motivation on the part of riot companies, the government, and the private sector, to solve some of these problems. >> a lot of companies involved in this. here were at&t and verizon?
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>> nowhere to be found. in fact, at&t has responded to shareholder request that demanded they have more transparency when it comes to their relationship with the nsa. they said it is none of your business. the telephone companies are noticeably missing from the state. >> y e >> i have seen for years the telecom companies be the weakest link. i am not understanding how they can just be so resistant to public opinion about what they are doing and so unwilling to stand up to their users. it is a real problem there. contractn has a big with various parts of the government. might that be what is going on? >> i can only regulate. >> verizon acquired a company, essentially a rack-based competitor, a company all about the storage and gathering of data.
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most of theirized capabilities. verizon bought that. what companies their contracts were. it was like these companies are very much doing the work of the nsa, helping them store this. it was at&t finally outed for having the equipment in this is before the bush administration, allowing the nsa to go in and get customer data without warrants. >> thank you. great to see you. coming up, how do you survive in a digital age? we will go behind the scenes. it is the gift that keeps on giving. adam will tell you what it is in today's insight and action. we will be back in two. ♪
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>> time for insight in action. i want to thank the team. the strategist, for pointing this out. 138. wendy kept there, you sell it. it is the gift that keeps on giving. if you go back a year, one or two times, we have seen it. you can see very clearly what has happened in each case. it has gone down for the team said, her we are back to 138. should not be there. three reasons as to why you should ensure it. each time he said this in the well you have done very for most recently, that was in october. you made about the 25% over the pacific aids. that works. it is a trade. i'm interested in seeing it. the reasons why you would want
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to sell once again up at 138. we are overlaying cree lines across the same chart of the euro. here is first one. economic data. but we have is in white. the same chart in the euro. in red, the difference between economic data in the u.s. versus in europe. it is getting worse. if it gets worse, why would you be want to be along the work -- the euro. -- they will keep doing their sugar, but you have got to go with fundamentals. point number two, the banks. asopean banks are not doing well. typically, as you would expect, the euro and european banks tend to trade in tandem. finally, this is the one i find most fascinating. we look at former rates on the euro versus the euro cash market.
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-- what ist happened happening now. forward rates are worse. this -- if you think it will be worse for the euro in two years, why would you want to be along the euro now? this is the presentation out of city today to city clients trading at fx. down.ver it the gift that keeps on giving. here he is again. >> interesting. closer says europe is slowly making progress but it should not be your beacon of hope in 2014. .is book he got his start on wall street josh, welcome back. >> thanks for having me. all be thatnnot bad? class ethic think it has problems. the banking union is one of the big stories we will watch in 2014. we will move to a single
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supervisory mechanism. the problem is the banks still have a lot of troubled asset. there is little by way of resolution funds. about 50 billion resolution funds. you will have a lot of uncertainty as the stress tests comes out. moving toward the risk of deflation. address not a way to that if the ecb continues to push against the issue of qa. >> that is not a new concern. the deflation issue is out there. >> but now we have assets being moves. we do not have banks increasing provision, and we will have a tough year in the banking sector, still too integrated. i spoke to a european banker over the weekend making the point that there are still all these problems out there and everybody is like, europe is out-of-the-way and he said, it is really not out of the way. still exist.
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there are structural problems that are not getting any better in terms of the overall economy. based, have -- addressed the issue of a political system separate and a monetary system. have not gone anywhere. >> and where you still have separate notional regimes. for how to resolve national banks, and the obligations behind the backstop in of. there is still not a quarter dated. -- >> the central bank saying -- >> we do not have any implication he is willing to go to -- go the qa -- qe round. i think we have to see what the u.s. is looking like. look at the jobs report friday, not bad. ultimately of that
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-- the labor participation force went up here to we have got six straight months of manufacturing growth now. question if you look at the demographics of that employment, we have 27% of males and females between 25 load -- living with their parents. not good. we need to see that and we need to see the unemployment pickup the force -- before we see. -- >> it is a compare and contrast with europe. >> it sounds like he was support the call on supporting the euro against the dollar. your call would it be -- would be to sell to european banks. >> a lot of activity. it will be really a pick and choose. based on balance sheets and footprint, etc.. coming up, is the pen mightier
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than the e-mail? that is today's is global outlook, it in the country's biggest banks are worried about how the final version of the rule will impact the bottom line. understandably so. you get out before the regulators take effect? three takes with trish coming up. ♪
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question number when staying in touch to met you actually wrote a letter with a real pen?
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holding onto that tradition, they think people are -- out there still want to spend big bucks on the tens. >> white gloves to handle a 30 two year limited edition leonardo da vinci. who really uses chance in a class the more notifications i get, the more i appreciate. a strong hunger for that. it is not the mass phenomenon. >> when someone says --
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>> many people say this. >> i am holding 200,000 euros worth of goal. this tape weighs five k spirit first, it gets rolled into the right form. then he gets cut out. then stamped. >> with 100 manufacturing 10 the no two pens are ever alike. it costs an extra 1200 euros for the basic service. from thech the dna letter, from the hand, from the movement, and we can adapt. handcrafted for the customers. >> for a fully personalized pen, production phase 2.5 years and up to one million euros. >> the funny thing, beautiful thing for us is, whoever
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collecting us for 10 or 15 or 20 years, whatever we do, these people behave like kids. press to not worry about misplacing such an expensive item. >> you stop using your pens as soon as you buy the right instrument. not a joke.? holiday pen. as -- it is a writing instrument. >> $32,000 for one of those bands. >> when i started merrill lynch in 1988, every managing director had that pen and would walk in the room and put it down on the desk. a status symbol. but you could not use one or have one. >> you earned the right to have it. >> as a matter of fact, my parents gave me it and i said, i cannot use it because i have earned the stripes. the same kind of thing.
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people wore suspenders. little did one know unless you are managing director, you could not wear suspenders either. >> coming up, the vocal war is ready to go. does this mean it is time to back away from the banks? triple threat is next. see you in two. ♪
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class tomorrow, u.s. regulatory agencies will release the final draft. banks trading for their own gain and limiting their ability to invest in hedge funds. in some cases, impact will be significant. goldman sachs and morgan stanley -- morgan stanley made be affected because they get 30% of revenue from principal training -- thanks totime us. joining us now, phil mattingly on the story. three yearsas been
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in the making. is it ready much done or can we expect changes in the last hours? class as of friday, people involved said there were still different drafts circulating throughout the different agencies right now. working in the weekend like this. working right up until the release tomorrow. the issues are the same key issues we have seen since the initial draft release in 2011. it is defining market-making, also how theys will decide whether or not the ceo signs off on this and maybe executive compensation as well. key issues, as we have been saying, the devil is in the details. we may not know for weeks or months what this actually means. >> compensating wings for the bank. what does it mean not for the mainstreamthe american companies? i will give you an airline for example. if an airline wants to hedge oil
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prices and might have otherwise have done that, how can they in the future? >> there will certainly be less liquidity available as a result of this. traditional market-making activities will be allowable here. what the fed will be looking at is defining this as gray area. they will probably take a, we will know it when we see it, approach. inwe see too much volatility the profits generated from trading, that will be prohibited. it will still put the onus on the banks and they will reduce liquidity. you will see more shadow banking systems step in. idea of hedge funds will come in play here? you will go to a private institution, as opposed to a publicly traded or larger commercial bank? class or the commercial institute and the enterprises
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themselves. the airline will end up having to take your risks themselves. >> let's go over to adam because you have been looking at the stock rises.e bank how much are they being affected , if at all, by concerns? chart, just show you a it is an absolutely beautiful upward channel. stocks are generally moving up. every time it has gone by, -- every time it has gone up, it has been a short term cell that come back down. moving higher again. it is over the past couple of years. there is your two year chart. if we backed off and go longer- term, there is the channel i am talking about. what you really see is we are now only about two percent of the way back from the fall. this is a classic traders
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moment. 50% bounces and that what happens is we bounced that 50%. this is usually where it stops. a tale of two chartier. >> we have been talking about this for the last three years. the vocal will and all implications is certainly well known to everyone on the streets. one would have to assume to a it isn extent, a lot of baked in. qwest a lot is, but i do not think really people are asking the question, where the top line growth going to come from for these companies? our largest banks have been generating income out of cost cutting -- cost-cutting, and topline. take away the trading, or reduce the trading, and you have to wonder where it comes from in a world where there is a not a lot left and cost-cutting will probably go another way. for many reasons, including increased cost. qwest theoretically, you are left with the banking and me ask you, is
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there a sense in washington that lawmakers would like to see financial institutions go back to find till -- financial plays? >> there is a small but vocal group of lawmakers who are absolutely onboard. talking with somebody throughout the entire process, advocacy groups who want smaller banks are all about the vocal rule. here is the threat we picked up from advocacy groups and lawmakers in weeks. they will redouble efforts behind proposals. banks lobbyhreat if hard enough and well enough to get the loopholes to bear -- they're looking for, and ease the restrictions on rules, there might be backlash. something to keep an eye out for in the lease ahead. >> we will definitely watch for it. it is interesting because you think about previous crises we
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have had, long-term capital being the smaller hedge funds that is really threatening to take everything down. you realize it is pretty hard to regulate against these things. with all those regulations coming into play, are there certain banks or institutions that might be more immune? if i'm looking at the financial landscape, which one would be best? >> small banks are obviously less involved here and they have got less to lose. they are also going to be beneficiaries more so, with the growth of lending if it really starts coming back in a meaningful way. of the big banks, jpmorgan, morgan stanley, goldman are the most at risk, with wells fargo being the least having to worry about this. >> thank you so much. the whole team.
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forng up, the last day lawmakers to sign up for obamacare. the options, glitches, and congressional complaints are ahead for you. tune in tomorrow because bloomberg is going inside ups, and it is the biggest time of year for the world passes biggest package delivery company. heading to the $1 billion have in louisville kentucky. are than 4 million packages day are sorted there in the holiday season. a live interview with the ceo expected tolgorithm save ups $50 million a year. it is only right here. more next. ♪
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>> lawmakers need to roll in a health care plan under obamacare or risk government subsidy. .eter cook
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they have their own problems on the hill, i imagine. qwest they have to eat some of it -- you some of their own cooking. same sticker shot their constituents are seeing across the country. the process is different for members of congress but the reality is they have more options overall. 112 gold level plans offered. the government picks up as much as 75% of premiums and the lawmakers use d.c.'s exchange. that has not spared them again from some of these problems. john boehner says it took several hours for him to sign up for his individual plan and he did not like the result. in 800 dollar a month bill once you factor it in. qwest my health insurance premiums will double. tuples arend the tripled under obamacare. i am thrilled to death, as you can tell. qwest many democrats report no
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big problems and rolling and they are coverage and cheaper premiums. most of the complaints are from the republican side. qwest do they have a choice to enroll? qwest they can opt out, but that will cost them cash. an example is the alaskan senator, deciding to enroll the exact same way alaskans are doing it through that means he gets no government subsidies, paying nearly $600 a month in premiums. others do not need to roll -- enroll because they are covered by other insurance. that includes ted cruz. he is covered by his wife's plan. she works at goldman sachs and her insurance is valued at some $20,000. he is by pat -- bypassing taxpayer help. i should point out his fellow texan governor, the only lawmaker choosing not to have health care at all next year. he says he is willing to pay the penalty. qwest thank you.
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-- >> thank you. the fcc has announced it has decided to push back its auction to try to make sure the software actually works. megan hughes joins us now from washington. deal is this whole thing? qwest it is a big deal for the wireless industry. the moment the first bid is placed at this auction, so, the original plan was for the fcc to publish auction rules by the end of this year in the spectrum 2014.n would be wheeler has pushed back until 2015. a new timetable will be voted on early next year. wheeler saying in a blog post, --
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here is why it is important for the wireless industry. airways will be volunteer by broadcasters. sold in box for companies like verizon and att -- at&t. wireless streaming of video and music. both sides seem to be understanding. beep says the job needs to done right and broadcasters like cbs, fox, and disney, already complaining the agency it was rushed. systems in place for this than what we have seen for, where the obama administration spent weeks trying to prepare the exchange while at the same time up and running. class aside from the obvious delay, how else will this be different? >> one big difference is testing. a beta version. technology will be demonstrated for participants in a mock auction.
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it will be tested before the sale happens. one of the big complaints about the health care exchange website, there was not an adequate end to end test of the entire system. >> thank you. next, the real problem with fannie and freddie. we will explain with josh rosner and will be right back. ♪
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qwest time for chart attack, where we show you two charts that will make you smarter. first, fannie and freddie kind of got stuck holding the bag. by some measures, they may still be the only measure in -- only game in town. walk us through what we are
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talking about and make it easy on viewers. >> a legislative reform push in washington to figure out what to do about fannie and freddie. do we liquidate them or fix them? right now, saying, let's just wait them out and start again. theeans, you will wipe out essentially and try to build it again from greenville. a difficult task. as opposed to stopping and i wasg -- saying, supposed to -- as opposed to saying, what is it that caused it. >> let's bring in the camera and show everyone chart number one. josh, if lane to the viewers what we're looking at. christ the red line are what fannie and freddie -- and freddie are supposed to be doing. the banks have liquidity bring up more. then, they pull the package and prioritize them and get a guarantee insurance for that.
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fannie and freddie decided they wanted to become growth companies so they started investing. christ in other words, they have got a huge market share up here and the problem is the portfolio has flatlined. christ no peer the way to think about is portfolio is where they got most of losses. not secondary market players, but investors in the primary market so that when the mortgage market failed, fannie and freddie failed as well your it inadequately capitalized and they were running a hedge fund by buying and holding securities. it is similar to what we are watching. class when he put it that way, it sounds like they are vitally -- violating the charter. qwest they were certainly violating its intention. if we're trying to fix the mortgage market -- market, maybe theyould start by saying are responsive to that and the answer is no. they fail because of inadequate capital. pro cyclical as
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opposed to being countercyclical liquidity provider. qwest not good. we said you had a second charter for us. lets fly the camera over once again. this is curious. it is all going down, whether it is private label. everything is going down here. >> the important thing to look at in this chart is the private label, which is the white line. it is all really nongovernment issued mortgage-backed securities. they do not as -- exist anymore. the only ones that exist are fannie and freddie. -- pieces banks. and they keep most of loans on the bus, but let's say they wanted -- it is private label. backed mortgages. qwest right. it was country wide as wells fargo. insuring -- issuing
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their own securities. standardization and a private label mortgage-backed market, they all walked away. any volume they do now get sold to fannie, freddie, or held in their portfolio. to replace fannie and freddie and hope private capital comes back seems funny with that chart. not anywhereal is near coming back. qwest let slide the camera in there so you can see. this is a total implosion private label, freddie, fannie, janie, congress has got its work cut out. hopefully, they will start asking the right questions rather than searching for -- >> thank you as always for being with us. dinnersrom mcdonald's to americans airlines debut, get the top 10 stops you need to know about. the closes next on street smart. next hour, uruguay is planning to officially legalize pot.
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will other countries follow suit? that story is coming up in today's edition of "street smart." ♪
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♪ not worry, we're getting you caught up on the only stocks you need to worry about. number 10, mcdonald's, the world's largest restaurant chain reported monthly figures that fell short of analyst estimates. falling for the fifth straight month in november, they posted their biggest monthly drop since set -- since february. >> morgan stanley is reducing their rating on the food producer citing milk prices.
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>> overweight, overweight with those last two stocks. number eight, qe resources, the company plans to spend 950 million dollars purchasing oil and gas properties in the midland sub basin in two west texas counties, helping them to increase production of high margin crude oil and natural gas. >> number seven, the former striker ceo, steven mcmillan, has been named to the top spot of the medical device maker, including two nominees of carl icahn in his settlement. down two percent today, they have agreed to buy back about 2 million shares held by charitable trust associates. mosaic says the move represents a major step towards their goal of more efficient balance sheet management. >> number five, disney, down one percent even as the animated coolsf "frozen," finally
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off "catching fire." cools off catching fire. >> how can it do that? >> i do not know, i have not seen it yet. it led the hall with the box office over the weekend. taking away the hall from the sequel.te hunger games >> i saw it this weekend in imax. >> what did you think? >> i did not like the ending, but i liked it. that theyng to guess will do part three in two parts. >> imagine milking this thing for all it is worth? it has made how much in three weeks? had to have been good. it got you to the movie theater. >> yes, it got me to the movie theater with that one. >> number four, abercrombie & fitch, martin jeffries gets a new contract tying compensation
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more closely with company performance. >> not that dude, the other dude, if you recognized him. >> you are interrupting trish. >> they have come under all of this fire. activist investors are trying to get him out. >> you can interrupt me, if you want. >> i do not want to interrupt either one of you. >> kraft food, thank you, up nearly two percent as morgan stanley upgraded the stock to overweight from equal weight. resultsected positive from productivity restructuring efforts. that is just harvard business school speak at its worse. >> all right, number two? >> you are interrupting again. >> they have fda approval for a hep c pill.
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there are $84,000 treatment leads a growing market for drugs that were fashionable. [closing bell] >> bringing us to the number one stock of the day, american airlines group, creating the world's largest airline after the merger, rising on confidence that they can avoid the problems that drag down other mergers. here we are, again, a new record , the dow jones industrial average barely eking out again, see -- the closing level s&p also higher for a gain of roughly three points, with the nasdaq also ending in positive territory. we want additional context for the day's market moves, and for that we are bringing in alix steel. >> we can talk about it. >> salt and pepper. [laughter] >> you have been covering the
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markets all day. >> there just is not that much going on. out, we wented positive and then went down for so much of the day. there was a little bit of momentum that came on friday from the jobs report, but not much, not enough. the dow jones, as trish said, really squeaking it out in terms of the gain. if you look at the groups there are not a lot of rhyme or reason here. telecom financials, industrials, some of the best-performing groups today, not a lot of trends here. >> the difference this time is that good news is good news. when they continued their trend on friday, finally creating a good mom -- good number is paying off as opposed to tapering sooner rather than later. >> for a day. >> you are absolutely right, good is good, bad is bad, we need that for consistency's sake. time for the roundup. you got something good?
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things tomeans two me, monday night football and merger monday. cisco is the deal today, the ,ood service version, sysco not the tech firm, cisco. they're doing a deal, buying a property from private equity owners, amazingly up 26% today at the open, the most since the 1980 deal the ulster their position in north america as the largest distributor of food and restaurants, expanding their geographical reach and supply chain cost savings. this is a big deal, 23% in one day. >> especially lately. >> lately you have seen a lot of that, where the acquirer sees a bump in the stock rice. >> right. maybe it is also a sign that the economy has turned. >> it is a different story for
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cisco, though. we have been talking about the markets today and the restaurant poorly, having done so bigger is better and they will have more power to control their cost, but it is because the industry is so weak, people have been eating out a lot less. >> in the most recent conference call, executives talked about a challenging environment in the casual dining sector. >> the real question here is -- where his regulation? 26% of the market, analysts said that regulation was an issue, it was the number one concern on the call after the deal was announced. the idea was that it would not be prevented from going through, but they may have to sell off smaller businesses to make the deal happen. >> i would watch a show that was just both of you talking at the markets desk. >> that is our life. and [laughter] >> look at that, salt and
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pepper. perfect. >> ok, all right. moving on. jumbo loans, exceeding the limit, back in a big way, both adjustable and fixed-rate jumbos , 34% to $16 billion in the first nine months of this year with adjustable rates comprising the most of the gain according to the trade publication "inside mortgage finance." jumbos accelerated the housing collapse back in 2009 with loans of over $1 million default thing at twice the rate of all mortgages. you know what? these mortgages are also very popular with investors. i was talking to jim hirsch the other day, one of the heads of the largest bond fund managers in the country, and he talked about nonagency mortgages is not being bought by fannie and freddie as an attractive place for investment. >> you have to wonder if it is because they think the house
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price will continue to appreciate or a comment on the fact that it is so low that they are looking at overall cause. are lot of those jumbos floating-rate notes. that has been another sector of rate growth, as they go up it adjusts. >> the bigger part of the question is -- is this the wind sign, seeing it go up? or is it just helping out the market? 57% of all homes last year were purchased with cash. >> cash? incredible. >> a huge figure. pimco,anies like blackrock, going out into the market and buying 40,000 homes at a time, that is why you have that huge number. >> the wealthiest people will buy the homes with cash and then take out a mortgage to do other things with. >> why not? very goode to have credit to get one of these
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jumbos. that is pretty high. post on as trivial as a a bad day, it could go to something as traffic -- tragic as a death in the family. there are times when the button is not appropriate -- and the like button is not appropriate on facebook. one of the company's legendary hackathon's came up with this -- and i think it is a good idea. >> even though it has the likes of the huffington post behind the report, i do not believe it. they are very credible, but i think it is bs. >> there you are. >> did they try at this like button at some point? >> they needed it. >> are you lifting weights? [laughter]
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>> here is the thing -- don't -- here is what i want people to do. if something tragic happens, don't post it on freaking facebook, please. you know? >> sometimes it is not always tragic. >> it is not an appropriate place. >> it is a way to let a lot of people know something at once. here's the story, i guy i went to high school with who lives in my hometown and was recently attacked on the front porch of his house. he lives in a not great neighborhood but he owns his house and that was the hook, he told the whole story. >> did you hit like? >> and then in the comments they put -- i feel weird hitting like about this. >> it is not as negative as a dislike. >> it is hard to fight back. >> i would like to vote for rather than a sympathy button, and empathy button. that is a good one.
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empathy is like i feel your pain. >> i am there with you. >> i like that. >> hopefully facebook is listening. >> i think it is ridiculous. >> earlier this year excitement was building around king, the maker of the highly addictive candy crush saga. the british company delayed their plans to go public because there flagship game has been too successful and executives are worried that investors may view the company is a one hit wonder. to developore time other moneymaking games. candy crush is the most popular game on facebook and has been downloaded onto mobile phones more than 500 million times, but the difference here is that it is actually profitable, which is not something you often hear from these gaming companies and tech startups that rely so much on social gaming network's. >> still, tastes change pretty
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quickly. >> it is smart that they do not want to necessarily rely on one thing when they come to market. look at the recent chart. >> exactly. >> it is pretty ugly. >> have you played it? >> i have a standing policy that i unfriend anyone who invites me to play any game. >> let that be a warning to you, america. >> it has like one billion players per day. >> you are losing friends, then. >> or if you invite me to like your page, also. >> what about simplifies the page? >> maybe i will rethink that one. you know the high line in the meet packing district? the thing that drew all of those infuriating hipsters to that area of new york? >> an elevated rail platform that was defunct, falling apart. >> it has not just wrought hipsters down, it has brought a new breed of cop urges --
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cockroaches. >> please, no figures -- no pictures. >> a cockroach that can survive outside even in below freezing temperatures. entomologists discovered it on the high line last year in some kid from brooklyn's beard, according to ap. [laughter] however, muching, like the visitors from the other boroughs, is that it is unlikely the new speech ease will mate with locals. >> it is very discriminatory, in other words? >> it will not get with anyone in the meatpacking area. >> it is anatomical. aboutdo not understand this is that i thought in the park all the plants are supposed to be native to new york, do you know that? but it could have been on the dirt, it is not necessarily native. for 75e it lived there million years and crawled its way up.
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>> when i was a kid and i lived here and then moved back to ohio , they did not have cockroaches in ohio. not right -- not like in new york. i only felt a certain sense of pride that we had these bugs where i came from, new york city, the just would not die. you could not even kill them in a nuclear war. >> things to love about new york. tomorrow, uruguay will likely be the first country to legalize marijuana across the board. we have that story coming up. plus, matt is taking a 12 day bitcoin adventure. today in his assignment he is actually going to buy one. we will tell you how it went. not so well? >> awesome, in the end. ♪
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♪ >> all right, smoke it, sell it, tax it.
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why not, right? it might be the new slogan for uruguay as they vote for legislation to legalize marijuana on the national level. this is a huge step, they would be the first country to allow this. we have more on this potentially historic decision. this legislation comes straight from the president himself. why is he pushing so hard for this? >> the first seemed to be the asset invite -- advisers, what was the smartest way to deal with it in the country? they said the smartest way to do it would be to legally regulate and tax it, and he said just knew it, and the president i think understands this is an issue of rate significance to young people in the country and i think that youthful perspective is very important and you think about the future of uruguay. >> he has certainly made some very bold moves. he legalize gay marriage, now
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this. as i look at the proposed legislation it reminds me of what we have seen around the country in various places like mendocino county. registered users will be able to purchase up to 40 grams per month from a limited number of pharmacies and registered growers will be able to grow up to six plants and co-ops will be able to grow up to 99 plants. to me it sounds a bit -- and i am curious if you agree -- like some of the regulation we have seen in place at the municipal level around the country. is a whole look at what we have seen around the regulation of medical marijuana around the u.s.. look at what the europeans are doing. theing up to six plants in privacy of your home? like colorado. where cooperative can designate one person to grow in a nonprofit basis, that is like spain. the system with a pharmacies to sell this stuff, a little bit like the alcoholic regulation
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model in colorado. they are tried to reassure their neighbors that there will not be major exports, that they are not allowing people from outside the country to buy. >> and it is illegal to sell for -- sell to foreigners. will they be having pot tourism? >> i think they are trying to find the sweet spot where you regulate it tightly enough so that you reassure your neighbors that you have it under control, but do not regulate it so tightly that you make a mockery or a farce of legal regulation. >> you also have to be careful because of pricing. if you regulate it too tightly, you will be driving it back underground. one other thing that struck me, ethan, three .4 million people living uruguay. it is basically half the size of the population of washington legalizedate that has
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marijuana for recreational purposes in the u.s.. what is the difference between trying to implement something in a country of 3.4 million as opposed to looking at trying to do it on the national level here, just the challenge, the sheer size of the united states of america makes it a very different proposition, i imagine. >> colorado is 4 million people? washington,ruguay, colorado, it is more of the same where the biggest challenge, the united states, 50 states, 50 state legal systems with federal law, making it more challenging. when colorado and washington voted to legalize last year, it had a catalyzing impact across the country. jumping to 58% here now, the same will happen with uruguay. what is going to happen after
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that is public opinion around america and other parts of the world are going to step back and watch this play out. they are going to legalize -- realize that legally regulating this stuff is a real option and countries are doing it, why not do the same instead of persisting? >> we have seen a number of former presidents, like in mexico, brazil, they were on set in terms of legalizing drugs in general, including marijuana, dealing with the crime issues that the region is facing. you are right, the region could start to look at the examples. being in the business network, a lot of people have estimated as being as much as of $100 billion per year industry. i spoke with one entrepreneur in seattle who is looking at uruguay very closely and was spending some time there, he saw this as an opportunity to extort
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-- export marijuana out of uruguay and sell it overseas. do you think that there will be much torsional enterprise built around marijuana in uruguay? >> not so much in uruguay. they are very keen to make this a local thing. even as we have seen foreign to current presidents changing global drug policy, they focused on this is a domestic thing. as a tax regulators around the country, that will be a regulator worth tens of billions of dollars and we will see the same thing around europe that we follow -- founded america. right now it will be relatively modest and the principal market impact will be to reduce the marijuana fromal paraguay to uruguay. bringing itstion, back home, washington has legalized it for recreational purposes, colorado is going into
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effect in 2014, what state is next? >> keep your eye on oregon, maybe alaska. keep your eye on washington, d.c., and california we will know more about in a couple of months. >> thank you, ethan. >> coming up, the megamerger is official. we learn more about the deal to create the world's largest airline. my interview within his next, right here on "street smart." tomorrow we are going inside ups , the busiest time of year for the world's biggest package delivery company, carol massar is headed to the company's $1 billion hub. carol in the brown, with ceo scott davis. maybe he will deliver some packages as well. coming up. ♪
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airlineorld's biggest is taking flight today, executives at u.s. airline -- us airways and united have signed the merger, officially creating their new company, and it is called the american airlines group and it began trading today under their ticker, aal. they want new revenue and savings under the mger, but also said the company would not necessarily cut fares but hold them steady. we caught up with him this morning right here on "street smart." is how itat this worked. >> the billion dollars in synergy is one that we feel comfortable with to produce, but it is the result of putting two networks together and being able to sell tickets that none of us can sell today to provide utilities to customers the do
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not exist today. we put the networks together and it allows us to take your people to more places and sell to customers that we cannot get today. me thatso told passengers and employees should not be worried about these changes. >> we are keeping all the employees, keeping all the airplanes, that is the way this merger works. the networks are highly complementary. togethert the networks and supply will be in change. -- unchanged. if supply is unchanged and amanda's constant, there should not be any problems. prices in our business move a lot based on various factors, but this merger is not going to be one of those factors. >> there you have it. obviously trying to restructure, full integrated cost savings. the curious thing is that fares are not necessarily going up. >> i have a hard time believing that one.
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now they have the collective ability to -- >> he says he wants to compete against united and delta and that is why they are not raising fares. >> bitcoin, next. matt miller bought one. ♪
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>> breaking news, the treasury department has just announced that it is out. you and me, by the way, taxpayers are out of general motors. this is a big deal. >> not something that was unexpected -- we knew the treasury was aiming to get out of the general motors holdings by the end of the year, but it motors news for general shareholders, maybe good news for general motors employees and car buyers. it allows the company to do things differently than they have in the past. for example, they do not need to live under the -- under the thumb of ken feinstein as fire at -- -- >> ken feinberg. >> right.
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they are now allowed to design their own executive pay packages and maybe they can draw some more serious talent, not that they do not have a ton already. they will be able to continue to spend freely on their products. they have done very well on this to the in with, for the government. if you say the government is bad at running a business, i will not argue with you at all, just -- but general motors had made -- has made some incredibly fantastic products while under the control of the u.s. government. >> good news for general motors, what about taxpayers? >> there was about a $10 billion loss, we are looking in the ballpark of that much. general motors and the government as well would argue that there were about 1.2 million jobs saved. that is the kind of calculation that economists sort of scoff at, but we just heard alan stephen last week on "
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cole bear," and he said it was good for the whole auto industry. and that it was good for the country that they got this bailout. those arguments aside, the news is that we are out, general motors stock has done fantastically well, even with that overhang. a lot of people and analysts still like the stock. >> and no one can call them government motors anymore. those days are done. that coin is back, dropping below $600 over the weekend after financial companies tried to ban them from doing transactions. baidu says bye-bye to bitcoin transactions. yous now above $900. are surprised? after all, this is a virtual currency that is pretty volatile and difficult to get your hands on, but matt miller is here to celebrate what he calls the 12 days of bitcoin.
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of your 12 day bitcoin adventure, you actually went out and decided to buy one of these things. how did that go? >> it was challenging at first, but the story has been getting so much attention in the media, the huge jump up to $1200 for the value, we figured -- what should we do? i said -- let me get just one bitcoin and we will see what we can do with it over the next couple of weeks. the first challenge was getting an illiterate guy like me to figure out how to buy the bitcoin. yes, i google, i tweet, facebook, that is about as far as i go. i said about going through a number of different methods. coin base was one, one of mira tour -- our reporters told us it was the easiest and most legit bitcoin website, but i did not want to put in my social
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security number. i did not have a visa. >> by the way, if you are going to be anonymous, don't forget the whole point is to be anonymous online. >> for some people. it, but inll do order for instant verification, and help me out if i am wrong, you have to enter some details, like bank account, social security, and verified by visa as well. >> if you want to do it literally instantly, yes. to be clear the point is not an -- anonymity, or it is for maybe a small subset of the internet underworld. >> how do you perceive the importance of bitcoin? if it is not anonymity? >> to me it democratizes many different aspects of finance. think about cross-border payments, that is a good example. western union has an entire business model premised on owning this large black box,
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whereas in bitcoin you have these exchanges popping up all over the world where what is involved -- >> you know what? you know what? the fee can be steep if you lose dirty percent of the value of your bitcoin in one day. until it actually smooths out some of these volatility issues, western union, even with steep fees, will be the alternative of choice. as for right now, if someone is trying to buy this -- like matt -- walk us through the rest of the story. and -- ended up going and getting a wallet and buying a bitcoin from someone i knew. i gave him cash and he gave me a bitcoin. i wanted to stay private. now that i have learned more i realize that it is a trustworthy organization -- fred over there, fred wilson, from union square capital behind it. i wanted it to be quick, easy,
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regarding my data. >> was it? >> at the end of the day, it was . >> if you happen to know a guy with bitcoin. >> if it was out in the middle of somewhere else and you did not know a guy, it would be harder. itas i learn more about it, could have been easier, and frankly i did not know that much to begin with, but it seems to be in its data phase, right? this seems to be a currency and community that is just starting to come to grips with what it is for and how it can be used? >> that is absolutely right. rewind the clock by one year, obtaining a bitcoin was much harder than it is now. you would have to send a wire to a place you might not trust and we have gotten to the point where now it is connect the bank account to your credit card and we need to know more about you, as was mentioned. think about the early days of a pal, they burned tens of
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millions of dollars per month trying to do what we did with digital currency, and we are very early on the curve. >> ok, bottom line, you are able someone youitcoin, know can sell it to you, what do you do with it? >> so far one of the things i have done is just immerse myself in the culture and community of bitcoin and it is incredibly interesting. people say that you go down the rabbit hole, there is so much to learn. obviously i want to buy stuff with it. i ordered pizzas for the office. >> they did not show up. >> yes, they did. >> you must have missed it. >> three delicious pizzas, but there are many different services that you can use. >> so, they use our merchant tools, speaking to the volatility, when a merchant receives a payment they can
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instantly lock in the exchange rate such that for them there is no exchange rate risk, which is where this entire system is going, really, harnessing the power of bitcoin to do payments on the internet. it was by no means made for it. >> for example, the big story last week was that someone purchased a tesla. you can get a flight on virgin galactic. but these merchants, virgin, tesla, pizza, they do not share any of the currency risk run the volatility. >> if you are managing, for example, merchant tools by instantly exchanging, that is correct. again, that is where a lot of this is going. and consumers, i think, will see their local currency as what appears. thanks so much, fred.
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matt, i am curious to hear more about this. >> tomorrow i am going to see about some other stuff i can buy . what else can i get with bitcoin? i will be delving into different subjects over the next couple of weeks. keeping them secure, is just one of these online wallets enough? i will talk about the finances, can you shorten it? and i am going to look into also -- fred is talking about merchants doing local currency, but what if there is no more local currency? what if we just all used to bitcoin? >> crazy talk. >> in cyprus they saw a lot of activity around bitcoin. >> a lot of these sealand vessels, these old oil land platforms that people are trying to turn into autonomous nations, they want to use bitcoin as their currency. >> i bet they do. >> i kind of dig the idea.
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>> coming up, the same game, not all celebrities are treated equal. we will navigate the world of celebrity endorsements, next. and later we have an audio only videogame, truly weird, which is why we are talking about it on "we're wall street." be right back. ♪
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>> well, time for the scene where you bring -- where we bring you the business behind entertainment and pop-culture. kobe bryant, back after recovering from that achilles' heel injury. we can debate how well he played , but one thing is for sure, he
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is not as effective off court as he is on court. paul smith is a ceo that generates this index on a weekly basis and he joins us now to explain. lower in the rankings than, say, lebron james. how do you measure if an athlete, celebrity, or anyone good spokesman? >> primarily through consumer research and they national representation of the u.s. andetplace i geography demographic. in the poll we ask people about their opinions, their likability, even things -- angles like -- people will say that they would do something another celebrity does, but maybe suggest someone else would, giving more to the story. >> likability, persuasiveness? >> trust. >> is it kind of like a q score?
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>> kind of. this one is done on a large population basis. >> 1000 americans. >> yes. >> the reality is that the frequency and the fact that we can turn them over on a weekly basis as well, with the other important element being the globalization of products. taking out these international markets around the world. >> let's talk about the names at the top. sports, peyton manning, hello. the williams sisters. phil mickelson. dave reichert actor. these people are all winners, but what else do they have? >> they have been on top for a long time. the williams sisters bring frankness to the equation. invariably these people tend to avoid trouble. >> that helps, doesn't it? woods in there?
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>> he is, but not in his right place right now. but he is coming back, it is a turnaround story, for sure. when people have a misstep, if they are good at coming out and putting a point of view on it. >> what about ready white? she is more believable or something then tom hanks and will smith. what it is it about her? >> a lot of the results on the higher end of the spectrum, her score is usual, and i thought that that was interesting. >> you are the guy who runs the company, what do you think it is about her? >> we do serve across the entire population spectrum, keep in mind. when you think about the not -- the last couple of years, she has done a very good job at becoming current again. she became a character and a lot of these situations, appearing
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in different programs, building her appeal in a way though she has been around for a long time. building up trust. names, you offer these like betty white, are you out there offering the names, or do people tell you? >> we survey specifically so that we get an image, we are asked if they know the person, and then we go to the next step. >> does it change much, week to week? >> it can when we find people involved in certain incidents. i am not an american, as you might know. it is all right, it is all right. i have been working on it all my life. the reality is that my view of the american society is incredibly forgiving. people tend to forgive.
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that is why i think it is how people deal with these circumstances, the way you see athletes rebounding. ande were all underdogs became here, maybe that is part of it. paul smith, thank you very much. >> what does this say about you? budweiser has a tweeting power that makes holidays better. this story is in today's weird wall street, for good reason. ♪
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forll right, it is time weird wall street, where bazaars business as usual. do you like paper airplanes? a new start up is testing this timeless homemade technology. meet the electric paper airplane. your self-made paper airplane turned into a smart home flying machine that is quickly becoming a holiday must-have. the inventor has already made more than $500,000 on kick starter, with 46 more days to go
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. i want to see this thing fly. and i were out shooting with a buddy the other day who want his kid up christmas present from a kick starter. kick starter might the a great place to do some christmas shopping, you know? >> i have another one for you. 'tis the season for ugly christmas sweaters and designated drivers. bear with me. puttingr in the u.k. is these things together. the beer company is promoting safer holiday cheer with safer high-tech where. #jumpers,meone tweets a machine hooked up to twitter sweatert one of these vest sweaters. more tweets equals more sweaters. silver guy, right over there. >> it is a bit peculiar.
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>> have a great night, we will be back here tomorrow. ♪
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>> it is approaching 56 past the hour, it means that bloomberg tv is on the markets. where did we close out the session? a record for the s&p 500, up /10 of of one percent --2 one percent, even though the dow rose a scant five points after it was done. i want to ring in a senior equities strategist for him wells fargo, usually in st. louis, but today he is with me here in the newsroom. that jobs report really seemed,
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for two days, to change the sentiment a bit, raising optimism that the economic recovery is getting back on track. i was looking at your most recent strategy piece from your firm, it talks about continuing optimism for next year but not a lot of talk of tapering, however , and the obstacles that that might bring. is aat re-seating fundamental concern? >> as far as tapering goes, i do not think the fed is going to do in december. week, maybe by march, but the jobs report, if you think about it, over the past three years were 185,000.dded 203, that is not much better than that. that we are still in this modest growth, modest inflation environment.
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very low inflation, we have the room to not necessarily taper right away. they will clearly have to taper at some time, but i do not think it will be on the fomc statement that comes out after this meeting, but maybe january or the next one? tell us in that statement, in fed speak, the next time they will do something. >> you think they are going to telegraph it? >> i think they will. granted, we have not been looking at the minutes from the fed that long, but historically they tell you in writing. they do not want us to define what they are going to do, but i think that march, maybe after that, when they started to be small. >> let's bring this back to stocks and the modest growth environment. sounds like you expect to see continuing gains next year, but not of the same magnitude as
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this year? >> not at all. our target range was 1700 in the s&p, so we are above that right now. based on our work, anyway, we are ahead of fair value. i think that it stole from the returns of 2014. we had a target out there of 1850 to 1900, throwing a couple of percent dividends, you are talking maybe six percent, seven percent total return, which is nothing to sneeze at, but certainly we will not see anything like we have seen this work.ased on our it will still be a good year with clients invested. i think that the cyclical bull market has maybe three more years to go. if that is the case and we see a seven percent return every year, that is pretty good, we want our clients to participate. >> i know that you like industrials but we will have to delve into that next time. we are out of time.
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scott, thank you so much. for "on the market," i am julie hyman. ♪ . .
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this is "taking stock." everything. american airline relaunches itself on the nasdaq. it has a new ticker symbol. what it means for passengers and shareholders. is the time right for luxury i items?-- i am 90 second to


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